While policy-makers debate how to ensure the UK gets more low carbon electricity, the big generators are actually piling their capital into large numbers of new gas power stations. Future achievement of carbon reduction targets will therefore wholly depend on finding economical ways of capturing the CO2 coming out of gas turbines. Without carbon capture and storage (CCS) the current rush for gas will lock the UK into high carbon electricity output for another generation. We urgently need to include CCS in the current support schemes for low-carbon generation.
Alstom, the world leader in CCS, has just released estimates suggesting that new plants with carbon capture should produce electricity at lower cost than any other low-carbon source. (1) Based on the results from 13 pilots and demonstration projects, the company is firmly optimistic about the main CCS technologies, saying that ‘technology and costs are not in themselves obstacles to CCS deployment’. It talks of costs of around €70 a megawatt hour, a far lower figure than nuclear energy is likely to cost. Its confidence contrasts with the wariness of the Committee on Climate Change which recently described the economics of CCS as ‘highly uncertain’. The CCC is probably being appropriately cautious, but the no-one is going to find out unless major countries commit to real support for CCS demonstration projects. The signs are not auspicious: the world’s most important pilot at AEP’s Mountaineer coal power station was abandoned a few weeks ago because the US government’s lack of any form carbon policy made investment impossible. Even if CCS only adds a small amount of the cost of generating electricity – and it will always do so – no generator will spend the money without a clear set of financial incentives that reward it for capturing and storing the CO2.

Similarly, to say that the UK administration has dithered on CCS would be unfairly sympathetic. In May 2007, BP’s advanced plans to build a plant to capture the CO2 from a plant on the north east coast of Scotland were scrapped because of the UK government’s refusal to let gas power stations participate in the CCS competition it planted to launch in 2007. Now, four years later, the CCS competition appears to be stalled. Those watching the disarray ruefully comment that if BP had been given the go-ahead, the UK would now be close to having the first fully functioning low carbon fossil plant sending CO2 into a depleted oil field. Instead we have got little but windy rhetoric.

Alstom’s confidence should force us take note. If the company is right – and it has more experience than anybody else in the world – CCS will be by far the best way of decarbonising electricity generation. Without any equivocation, the company says that a gas power station capturing and storing its CO2 will be competitive with a conventional power station at a carbon price of no more than €40 a tonne. Nuclear power will need financial support equivalent to at least twice this figure.

Like nuclear, a gas power station equipped with CCS will be able to operate round the clock, with no worries about unpredictability or intermittency. Alstom suggests that the greatest uncertainty lies not in the engineering of carbon capture, but in the lack of firm knowledge of how much it will cost to run CO2 pipelines and inject the gas into depleted oil reservoirs or into the deep saline aquifers underneath our feet. (Much of northern Europe sits on top of an aquifer that looks suitable to accept CO2). But, however uncertain, these costs are less critical to the financial viability of CCS than the capital and operating cost consequences of initially capturing the carbon

To my mind, the other possible advantage of CCS is that it requires the continued consumption of fossil fuels, helping to keep the price of coal and gas high. CCS plants actually need to use more fossil energy to generate electricity than a conventional plant, increasing the rate of depletion of cheap sources of coal and gas and increasing the incentive to switch to low carbon alternatives.

But, in any event, the UK urgently needs to include CCS in its renewable energy subsidy scheme (ROCs) to provide an immediate and transparent incentive. If the incremental cost of CCS is as low as Alstom claims, the generators now quietly building tens of gigawatts of new natural gas plants around the UK will need less than half the subsidy of offshore wind to incentivise them add CCS. Why not try it and see what happens? It can’t be any worse than the mess that CCS policy is in at the moment.